According to data attributed to the Microcredit Regulatory Authority (MRA), an organization that supervises microfinance operations of Bangladeshi nongovernmental organizations, microfinance borrowers in Bangladesh earned BDT 3.8 billion (USD 46.5 million) in interest on their savings for the period from July to December in 2011. Microfinance borrowers must deposit a fixed quantity in a savings account every week, and microfinance institutions (MFIs) are mandated to pay at least six percent annual interest on these savings. However, MFIs reportedly often neglect to pay interest on these savings accounts as a result of weak enforcement.
According to a statement attributed to Khandakar Mazharul Haque, executive vice-chairman of MRA, MRA plans to boost enforcement of the interest payment requirement to improve confidence in MFIs.
The Microcredit Regulatory Authority was established by the Bangladeshi government in 2006, under the Microcredit Regulatory Authority Act, to increase the transparency and accountability of microcredit activities of nonprofit MFIs in Bangladesh. MRA has the authority to take punitive measures when an MFI fails to comply with MRA’s regulations.
The 73 Bangladeshi MFIs that reported 2010 data to the US-based nonprofit Microfinance Information Exchange (MIX) held an aggregate gross loan portfolio of USD 2.6 billion disbursed to 22.8 million borrowers.
By Charlotte Newman, Research Associate
About Microcredit Regulatory Authority (MRA)
The Microcredit Regulatory Authority (MRA) is Bangladesh’s primary regulator over the microfinance activities of NGO micofinance institutions (MFIs). MRA has three primary functions: to license MFIs, to supervise MFIs for compliance with licensing requirements and to enforce sanctions in cases of non-compliance. In addition, MRA monitors microfinance activity through audits and addresses customer complaints. The Board of Directors, which oversees the governance of MRA, consists of heads of executive levels of government, including the Governor of Bangladesh Bank, Dr Atiur Rahman who serves as Chairman.
Sources and Additional Resources:
The Financial Express: “Micro-borrowers’ Interest on Savings Amounts to Tk 3.8b in July-Dec,” http://www.thefinancialexpress-bd.com/more.php?news_id=96421&date=2012-01-30
MicroCapital.org story, June 20, 2011, “MICROCAPITAL BRIEF: Microfinance Regulatory Authority (MRA) of Bangladesh to Maintain Interest Rate Cap of 27%, Reduce Grace Period, Number of Loan Instalments,” https://www.microcapital.org/microcapital-brief-microfinance-regulatory-authority-mra-of-bangladesh-to-maintain-interest-rate-cap-of-27-reduce-grace-period-number-of-loan-instalments/
MicroCapital.org story, March 16, 2010, “MICROCAPITAL BRIEF: Microcredit Regulation Authority of Bangladesh to Make Public the Interest Rates Charged by Microfinance Institutions (MFIs),” https://www.microcapital.org/microcapital-brief-microcredit-regulation-authority-of-bangladesh-to-make-public-the-interest-rates-charged-by-microfinance-institutions-mfis/
MicroCapital Universe Profile: Microcredit Regulatory Authority
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microcredit+Regulatory+Authority+%28MRA%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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